A bill endorsed by Maryland's powerful banking lobby that would raise the interest-rate ceiling on consumer loans has become such a victim of competing political interests that its prospects for passage this year in the General Assembly now appear weakened.
Although the bill seemed virtually assured of approval just a few weeks ago, recent disputes between a legislative committee and other sponsors over some of the consumer protection provisions, as well as the allowable rate of interest charged on credit cards, have given a new ray of hope to opponents of banking deregulation who want the bill killed.
Legislative leaders who support the bill conceded today that informal vote-counts in the House of Delegates show only 59 or 60 members in favor, some 11 fewer than are necessary for passage. The bill is expected to reach the House floor for a vote on Friday.
"There is no argument that we stalled with the bill to try to get the votes," said Del. John J. Pica (D-Baltimore), chairman of a House Economic Matters subcommittee that changed its position on interest levels twice in a 24-hour period this week. "There have been too many interests involved."
If the House votes against the measure, the action will be perceived as a coup for consumer and labor groups. They have expressed doubt about the banking lobby's arguments that the lending industry needs higher interest ceilings to ensure the availability of credit for borrowers and to bolster the state's troubled small loan companies.
If it is is approved, as once seemed so likely, Maryland's financial industry will have scored its biggest legislative victory in recent years on an issue that almost always has been greeted with hostility in this legislature.
The tortured evolution of "the banking bill," as it is known here, has frustrated political leaders, including its chief advocate, Gov. Harry Hughes, who has been criticized by some legislators for being too willing to compromise on a volatile political issue.
It has given added leverage to Hughes' newly announced primary election rival, Sen. Harry J. McGuirk (D-Baltimore), whose opposition to the governor's original interest rate proposal threw the first spark into the campaign fire. The chaos over the bill also has created a new air of tension between the Economic Matters Committee and Attorney General Stephen H. Sachs, whose role on the banking issue has drawn resentment from some committee members.
The legislative process has become so erratic that the committee, chaired by Del. Fred C. Rummage (D-Prince George's), which first approved the bill last week, nearly lost the support of Hughes and Sachs when it voted to exclude a key consumer protection. It was after that vote that Rummage and other House leaders discovered there were not enough votes to bring the bill to the floor and that amendments would be necessary to regain Hughes' and Sachs' active endorsement.
Pica's subcommittee, meeting yesterday, agreed to restore the consumer protections but also took the suprising action of lowering the proposed ceiling for interest rates on credit card charges from 24 percent to 21 percent (it is currently at 18 percent). The subcommitee originally had agreed to exclude some consumer protections as a concession to the bankers. But the action to lower the interest rate was aimed at another group.
"It was a gesture to labor," Rummage said today.
Rather than engender more support in the House, as Rummage had hoped, the legislative tinkering created another uproar. The House leadership, meeting this morning, told Rummage they would not support the bill unless the ceiling stayed at 24 percent.
The House subcommittee reversed its position today. The full committee approved the bill but included the consumer protection.